Siemens Healthineers Eyes New Opportunities for Molecular Segment as Dx Business Coalesces Post-IPO

NEW YORK (360Dx) – After raising €4.2 billion ($5.2 billion) in an initial public offering in March, Siemens Healthineers is a more focused, flexible company, dedicated to improving its diagnostics business, according to the heads of its molecular, laboratory, and point-of-care testing units.

Going forward, the newly independent firm, which is headquartered in Erlangen, Germany, will continue to invest in diagnostics by bringing its menu of PCR tests for infectious diseases to the US and other markets, among other objectives.

"We don't see any change overnight, we continue to invest in R&D and in our products," said Fernando Beils, general manager and head of global molecular diagnostics at Siemens Healthineers. "The IPO from all perspectives hasn't changed that."

Molecular, together with laboratory and POC diagnostics, comprise the three main units of Siemens Healthineers' diagnostics segment. The company also has an imaging segment that generates much of its sales. Earlier this month it reported that imaging contributed €1.9 billion to the firm's first quarter revenues of €3.2 billion, while diagnostics contributed €970 million.

The company has invested heavily in diagnostics in recent years, though, and in December acquired Fast Track Diagnostics, a Luxembourg-based molecular testmaker, gaining its menu of more than 70 assays that run on Siemens Healthineers' Versant kPCR Molecular System.

Also last year, the firm acquired Epocal, a point-of-care blood gas testing portfolio, from Abbott. And in 2016, Siemens bought NEO New Oncology, a Cologne, Germany-based next-generation sequencing services company. The acquisitions were done in parallel with the rollout of Atellica, a new, automated immunoassay and clinical chemistry platform. According to Beils, these activities underscore Siemens' desire to flesh out its diagnostics business in order to cater more broadly to its customers' needs.

"In order to be successful in the diagnostics space, you need to have a broad portfolio offering, and molecular is part of this," said Beils. "We didn't buy these businesses to harvest them," he added. "We have the vision to broaden these businesses, to expand them."

As part of that expansion, Fast Track Diagnostics last month launched Fast Track Cycler, a compact molecular testing platform, as well as accompanying FastFinder software. Beils said the launches are part of Siemens Healthineers' efforts to make its tests available to smaller laboratories, including those in emerging economies. The software was developed with UgenTec, and is CE-IVD marked for use with Fast Track multiplexed PCR kits.

"We are constantly evolving this platform," said Beils. "We know that in order to be competitive, there needs to be ongoing investment." Beils noted that Siemens Healthineers will continue to update its Fast Track assays, as well as introduce new ones as they become available. While their regulatory status in the EU makes them attractive to European labs — especially in light of the new in vitro diagnostics directive that requires review by notifying bodies prior to clinical launch — Siemens Healthineers is also interested in bringing the Fast Track menu to the US.

"If you ask if Siemens is going to the US [with these tests], the answer is yes," said Beils. However, he shied from committing to a timeline for when the Fast Track kits might gain US regulatory clearance. "We are observing this very closely, and we need to see what our customers' needs are," he said. "We will work closely with the [US Food and Drug Administration] to make sure we have a strategy."

Siemens Healthineers already has a relationship with the FDA around its Versant platform. The firm last year received premarket approval for a hepatitis C virus genotyping test on Versant.

Fast Track is a platform-agnostic offering though, and it has been validated for use on more than 10 thermocyclers, such as the Thermo Fisher Scientific ABI 7500 and Roche LightCycler 480 PCR platforms. Siemens Healthineers believes this will make the offering attractive to labs that do not wish to acquire new instruments in order to run Fast Track assays, Beils noted. He also said the artificial intelligence algorithm used in its software supports an analysis time of about a minute, a significant reduction. Typically, analyses of such panels can take up to an hour, he said.

"Customers enjoy this especially, because time gain is critical in certain instances," said Beils.

Siemens Healthineers believes that not requiring upfront capital investments plus a quick analysis time should make the Fast Track menu particularly attractive to emerging markets that are looking for affordable, cost-effective offerings. Though Fast Track Diagnostics has been available globally — the company, which employees around 80 people, also has offices in Malta and India — Beils said that Siemens Healthineers is trying to expand that business.

"We want to help emerging economies," said Beils. "We are trying to foster this by penetrating those geographies much deeper."

Beyond turnaround time and limited capital investment, Siemens Healthineers' investments in Fast Track spring from a focus within its diagnostics business of consolidating its offerings.

"When a lab wants to consolidate the broadest menu of infectious disease tests on one platform, then Versant would be ideal," said Beils. He noted that laboratories, especially in Europe, are in the process of consolidating testing due, in part, to new regulations covering molecular tests.

"If you observe the molecular space in Europe, you have a very fragmented homebrew and laboratory-developed test market," said Beils. "A lot of our customers feel uncomfortable providing those tests and they would prefer that a major supplier, like Siemens, would take this on and have a regulatory-cleared offering."

Atellica and POC

That emphasis on consolidation is also at the heart of Siemens Healthineers' Atellica Solution, for which it gained both a CE-IVD mark and FDA 510(k) clearance last year. The system pairs automation-ready immunoassay and chemistry analyzers and relies on bi-directional magnetic sample handling to enable the combination of up to 10 components into more than 300 custom configurations. Its immunoassay analyzer can run 440 tests per hour, the firm claims.

Siemens Healthineers last month announced a partnership with Brazil's Hermes Pardini Group to set up a clinical analysis lab in Belo Horizonte that would occupy 3,500 square meters of floor space and run tests 24 hours a day. Set to open next year, the new lab is expected to run 110 million sample tubes annually, an operation that will involve at least 100 analyzers, including more than 50 Siemens Atellica Solution clinical chemistry and immunoassay analyzers.

"You really need to imagine something like a factory," said Johannes Becker, vice president of portfolio and product management for Siemens Healthineers' laboratory diagnostics unit, of which Atellica is considered a flagship platform. "This is a massive lab, and even three or five years ago, these kinds of operations were done at a very different scale."

Becker said that Siemens Healthineers anticipates similar agreements going forward around Atellica with central laboratories that seek to scale up operations. "It's a very important business segment for us," he said. Siemens Healthineers continues to invest in Atellica, and a February 2018 company presentation cited €380 million in capitalized R&D investments into Atellica as of September 2017.

The company also features a new Atellica instrument, called the Atellica MDX 160 Molecular System, on its website, describing it as a "flexible, automated molecular system with a growing IVD menu, including LDTs, that supports multiple sample types." Becker declined to discuss the system or when it might become available.

"In the long run with Atellica, we will be looking to constantly innovate," said Becker.

In general, he said that Siemens Healthineers is focused on improving operational efficiency in its laboratory diagnostics offerings. "This is really where our strategy is, to allow customers to meet the same stringent expectations without compromise," Becker said. "To do more with less."

Becker noted that Siemens Healthineers' recent IPO should support those ambitions.

"It makes a difference in that we as a health company, and not an industrial conglomerate, can make sure our processes is customized to that specific regulated environment," said Becker. "In terms of decision-making, or strategic freedom in looking at external opportunities, that's an advantage of being an independent company."

Siemens Healthineers' POC unit is the third pillar of its diagnostics segment and is similarly an area receiving both investments and attention from the firm as it pursues its strategy of consolidating testing into a single experience for customers. In November, Siemens Healthineers bought Epocal, gaining its epoc handheld, wireless blood testing platform through the deal. In February, the FDA cleared two tests for the platform, one to measure blood urea nitrogen (BUN) and another to gauge total carbon dioxide (TCO2) in patients' blood samples.

The system has also been integrated into Siemens' POC Ecosystem, an informatics set up that enables up to 170 devices to connect into the same data management system.

"We are also following market trends of moving from offering individual analyzers to solutions," said Anuj Dhingra, vice president of product marketing for Siemens Healthineers' POC Diagnostics unit. He said that Siemens Healthineers hopes this approach will "open doors to more solution-driven organizations," such as local or national health systems.

All of Siemens Healthineers' diagnostics units are sold via a single sales force, Beils noted, though it does have sales and marketing teams organized according to businesses. This approach allows laboratory customers, for instance, to become aware of new molecular or POC tests.

"When it comes to key account management, we want to make sure we have one face," said Beils.